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Deloitte comment letter on tentative agenda decision on IAS 32 option to settle with fixed number of equity shares

Published on: Oct 01, 2013

We have commented on the IFRS Interpretations Committee tentative decision not to take onto the Committee’s agenda a request for clarification of the classification as equity or as a liability of a financial instrument that bears interest in cash, is mandatorily convertible into a variable number of shares (subject to a cap and floor) on a stated maturity date and gives the issuer an option to settle at any time before maturity for cash equal to all interest that would have been payable until maturity and the maximum number of shares that would have been delivered on maturity.

We agree with the IFRS Interpretations Committee’s decision not to add this item onto its agenda, however, we suggest that the Committee should consider an alternative view if the instrument as a whole is not a derivative, the right for the issuer to redeem the instrument is, and therefore it is subject to the ‘fixed-for-fixed’ criterion in paragraph 11(b)(ii).

Download the full comment letter below.


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